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STATE OF MICHIGAN IN THE CIRCUIT COURT FOR THE COUNTY OF WAYNE

MICHIGAN DEPARTMENT OF TRANSPORTATION, Plaintiff, Case Number 09-015581- CK Honorable Prentis Edwards

v. DETROIT INTERNATIONAL BRIDGE COMPANY and SAFECO INSURANCE COMPANY OF AMERICA,

09-015581-CK FILED IN MY OFFICE WAYNE COUNTY CLERK 1/12/2012 10:54:05 AM CATHY M. GARRETT

Defendants, ____________________________________/ OPINION and ORDER At a session of said Court held in the Coleman A. Young Municipal Center January 12, 2012 Detroit, Michigan on: ____________________ PRESENT:

The Honorable Prentis Edwards Wayne County Circuit Court Judge

On November 3, 2011 the Detroit International Bridge Company (DIBC) was found in civil contempt for failure to comply with the February 1, 2010 Order of this Court. The matter was continued until January 12, 2012, for the Court to make a determination regarding the appropriate sanctions to impose for the persistent refusal of DIBC to obey the February 1, 2010 Order of this Court. In addition, DIBC has filed motions for an evidentiary hearing, a site inspection, and a request that Manuel “Matty” Moroun (Mr. Moroun) be excused from attending the January 12, 2012 hearing. It is the contention of DIBC that Mr. Moroun is neither the owner of the DIBC nor a decision maker regarding the Ambassador Bridge Gateway Project (Project). DIBC therefore asserts that Mr. Moroun‟s presence at the hearing would not assist the Court in devising an appropriate sanction. The parties have had an opportunity to discuss the issues raised by the requests for an evidentiary hearing and a site inspection. Further hearings would simply rehash matters that have already been discussed and result in further delay. The motions for an evidentiary hearing and site inspection are Denied. 1


Throughout these proceedings, an enormous amount of paperwork has been presented to the Court by DIBC. There have been numerous pleadings filed in this Court as well as other Courts relating to the issues involved in this case. The records in this case contain briefs and reports prepared by DIBC including the bi-weekly status reports. In addition, there have been numerous oral arguments presented related to this case. Throughout these lengthy proceedings, this is the first instance in which there has been the slightest hint that Mr. Moroun does not have an ownership in the DIBC or have any authority related to the Project. There is nothing in the record of this case to support DIBC‟s claim that Mr. Moroun does not have any control over decisions relating to the Project. Regardless of the designation assigned to Mr. Moroun, the record in this case clearly shows that he has the power over decisions with respect to the Project and the power to ensure compliance with the Order of this Court. His presence is therefore required. The request for Mr. Moroun to be excused from this hearing is therefore Denied. There are several important concerns raised by the contumacious conduct of DIBC. DIBC actions have impaired the effectiveness and authority of the Court. The Michigan Department of Transportation (MDOT) has a right to compliance with the February 1, 2010 Court Order, DIBC has disregarded that right. Of greater significance is DIBC‟s disregard for the rights of the members of the public, who are the intended beneficiaries of this project. The Project was intended to provide a direct link between the I-75 and I-96 freeways to the Ambassador Bridge. The construction of this project was designed to remove bridge related traffic from surface streets in the local communities. The government has expended millions of dollars rebuilding the interstate freeways relying on DIBC to build roads connecting the freeways to the bridge. The Court has afforded the DIBC decision makers several opportunities to remedy the conditions that resulted in the second finding of contempt on November 3, 2011. On January 10, 2011, the Court found that DIBC was in contempt of Court for failure to comply with the February 1, 2010 Order of this Court. As a result of that finding Dan Stamper, President of DIBC, was ordered imprisoned contingent upon DIBC‟s compliance with the February 1, 2010 Order. After a brief period of confinement, Mr. Stamper was released from custody based on DIBC‟s assurance that work would resume immediately on the Project in accordance with the February 1, 2010 Order. Since the entry of the February 1, 2010 Order, this Court has issued Orders reaffirming DIBC‟s obligation to perform construction in full compliance with the approved design. DIBC has chosen to ignore the February 1, 2010 Order of this Court. DIBC has failed to correct certain variances, remove certain structures, and construct certain components in accordance with the approved designs, including the following: 1.

Pier 19 interferes with the path of the truck road required by the Performance Bond and Maintenance Agreement.

2.

The two-lane truck road from the truck plaza to S02 has not been constructed. 2


3.

Piers 11, 12 and 13 under S01 were constructed in conflict with the four-lane road required by the C1 drawing attached to the Performance Bond.

4.

The Access Road does not conform to the requirements of the February 1, 2010 Order of this Court.

5.

DIBC has not constructed the north or south special return routes required by the Maintenance Agreement.

6.

The S04 and S05 bridges have not been constructed over 23rd Street.

7.

The design of 21st Street does not satisfy the requirements of the Plans attached to the Performance Bond.

The Court has considered several options to coerce the DIBC to comply with the February 1, 2010 Order of this Court, which includes: 1.

Require the Safeco Insurance Company (Safeco) to complete the project.

2.

Allow an independent construction company to complete the project.

3.

Impose financial sanctions and order the imprisonment of the owner and officers of the DIBC until DIBC complies with the February 1, 2010 Order.

4.

Appoint a receiver to stand in the place of the owner and officers of DIBC to make decisions to comply with the February 1, 2010 Order.

One of the options considered was to require DIBC‟s surety Safeco to take over the responsibility for completing the project. A default has been taken against Safeco. However, even without the default, Safeco as surety is liable for the responsibilities of its principle DIBC, which includes completing the project and monetary damages. On July 8, 2011, Safeco was ordered to submit a detailed plan that may be implemented to complete DIBC‟s portion of the Gateway Project. MDOT as well as DIBC were given an opportunity to respond to Safeco‟s plan. A fair review of the information submitted by the parties in response to Safeco‟s plan makes it clear that this project would be bogged down with further litigation in addition to needless delays if Safeco was ordered to take on the construction at this time. Requiring Safeco to take on the construction obligations of DIBC is not the best option available at this time. The use of an independent contractor to complete DIBC„s portion of the project would also be challenging. There are funding considerations, oversight concerns, probable litigation, as well the contractor‟s need to assess the construction requirements which could prove to be a formidable task for a contractor new to the project. The contractor would be required to arrange

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for the completion of construction drawings for review and approval by MDOT. The assessment and coordination of the construction needed would require interaction with other entities resulting in further delays. The use of an independent contractor would further delay the completion of the project and would therefore not be the best option to use to complete the project. The use of a receiver would likely produce many of the same problems as those anticipated by the use of an independent contractor. At the Court‟s direction, the parties presented briefs discussing their positions regarding the appointment of a receiver. In addition, a hearing was conducted on December 1, 2011, at which time representatives from MDOT, DIBC, and Safeco were allowed to make oral presentations. Based on the information that has been presented, it appears that the appointment of a receiver at this time would generate a number of issues resulting in additional delays. There are funding issues that would likely bring about additional litigation and delays. There are also the concomitant problems of safeguarding the funds and coordinating construction activities. The receiver would be required to hire design consultants, develop plans for approval by MDOT and obtain bids for construction contracts. Appointing a receiver at this time would likely greatly prolong the time required for the completion of the project. The appointment of a receiver at this time would not be the best option to complete this project. After careful review it appears that the use of any of the previously discussed options at this time would result in further inconvenience for the motoring public and the residents of the area, have an adverse impact on international trade, and result in further litigation and delays. DIBC is best equipped to complete Part A at this time. The evidence clearly established that DIBC has the present ability to complete the construction of its portion of the Project in compliance with the Order of this Court. DIBC decision makers have the power, resources, and requisite understanding of the project to ensure the timely completion of its portion of the Project. Control of the compliance process is in the hands of the decision makers at DIBC. The decision makers at DIBC have the obligation to ensure the completion of its portion of the Project in accordance with the February 1, 2010 Order. Based on the records of this case, it is clear that Manuel “Matty” Moroun, Dan Stamper, and Matthew Moroun are the decision makers who have the power and control over decisions regarding compliance with the February 1, 2010 Court Order and the construction of DIBC‟s portion of the Project. These key decision makers have the power to complete DIBC‟s portion of the Project in accordance with the February 1, 2010 Order. It is well established that the Court has independent inherent authority as well as statutory authority to impose sanctions for contempt. In re Contempt of Dougherty, 429 Mich. 81 (1967); MCL 600.1701 et seq. In addition, the Court in Homestead v. Holly Twp., 178 Mich. App. 239 (1989), pointed out that the statute authorizes payments for losses including attorney fees 4


sustained as a result of the other party‟s contempt. The Dougherty case and MCL 600.1715(2) indicate that in civil contempt cases where there is an omission to do what is still within the contemnor‟s power to do, imprisonment may be imposed until he performs or no longer has the power to perform. M.C.L. 600.1715 contains the general sanctions that may be imposed for contempt. That statute states in part as follows: (1) Except as otherwise provided by law, punishment for contempt may be a fine of not more than $7,500.00 or imprisonment which, except in those cases where the commitment is for the omission to perform an act or duty which is still within the power of the person to perform shall not exceed 93 days, or both, in the discretion of the court…. (2) If the contempt consists of the omission to perform some act or duty that is still within the power of the person to perform, the imprisonment shall be terminated when the person performs the act or duty or no longer has the power to perform the act or duty, which shall be specified in the order of commitment, and pays the fine, costs, and expenses of the proceedings, which shall be specified in the order of commitment. The Court is aware of the firmly established principle of law that requires that the sanctions imposed for contempt should be the least that is adequate to accomplish the purpose. The Court is imposing coercive sanctions to force compliance by DIBC with the Order of February 1, 2010. Paragraph 12 of the parties April 23, 2004 Agreement, provided that the anticipated latest date for completion of the project would be 48 months after the date of the agreement. It is now over 3 ½ years beyond the anticipated completion date for the construction of the project. DIBC has persistently contrived tactics to avoid fulfilling its contractual obligations and complying with the Order of this Court. A substantial amount of time has been wasted as a result of the tactics used by DIBC to delay and frustrate the implementation of the Order of this Court. It is important that the Court impose a sanction that will ensure the completion of this project without further needless delays and inconvenience to the public. The sanction must also serve to preserve the authority of the Court and enforce the rights of MDOT by requiring compliance with the Order. Despite the fact that the decision makers at DIBC have the power to complete DIBC‟s portion of the Project in accordance with the February 1, 2010 Order, it is clear from the records of this case that only stern actions by the Court will coerce them to fulfill their obligations. The maximum fine allowed by statute of $7,500.00 is an inconsequential amount given the circumstances of this case. The imposition of financial sanctions alone will not persuade DIBC to comply with the February 1, 2010 Order. It is clear that the decision makers of DIBC do not intend to carry out construction of its portion of the Project in conformity with the Order of this Court, without the Court imposing meaningful coercive measures. DIBC has the power,

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resources, and knowledge to complete its portion of the Ambassador Bridge Gateway Project in accordance with the February 1, 2010 Order of this Court. IT IS THEREFORE ORDERED that the Detroit International Bridge Company pay a fine of $7,500.00 to this Court within 14 days of the date of this Order. IT IS ORDERED THAT the Michigan Department of Transportation shall submit to the Court its cost and reasonable attorney fees incurred as result of these contempt proceedings within 14 days of the date of this Order, at which time the Court will enter an Order awarding MDOT a specific amount of costs and fees. IT IS ORDERED THAT Manuel “Matty” Moroun and Dan Stamper shall be imprisoned in the Wayne County Jail until the Detroit International Bridge Company complies with the February 1, 2010 Order of this Court. IT IS ORDERED THAT the imprisonment of Manuel “Matty” Moroun and Dan Stamper shall cease when the Detroit International Bridge Company has fully complied with the February 1, 2010 Order of this Court or they no longer have the power to comply with the February 1, 2010 Order of this Court. IT IS FURTHER ORDERED THAT this matter is continued until February 9, 2012 for further review of the status of the project and the appearance of the Vice President of DIBC, Matthew Moroun.

/s/ Prentis Edwards __________________________ JUDGE PRENTIS EDWARDS

Date:January 12, 2012

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